Indian Equity Market Sentiments

Persistently high inflation and RBI’s active monetary policy stance coupled with global recovery uncertainty weighed on investor sentiment. Also, Euro zone issues continued to remain on investor radar. The BSE’s key index breached the psychological 18000 mark
during the month as investors offloaded positions ahead of the earnings season. Investors feared to bet on corporate earnings that seemed to be impacted by higher input and borrowing costs. The index however managed to regain the key level and ended with moderate gains as investors breathed a sigh of relief after Greece took a step closer to avoiding the euro zone’s first sovereign default. Further, FII flows in Indian equities also suggested that risk appetite was back. FIIs turned net buyers in Indian equities to the tune of Rs. 2487 crore after selling equities worth over Rs. 6000 crore in the month of May (Source: www.sebi.gov.in). On the sectoral front, performance was highly skewed. Realty and Oil & Gas shed 7.3% and 4%, respectively. On the other hand, capital goods led with 6.2% gains followed by consumer goods at 4.9% (Source: BSE). Further, weak performance of small and midcap indices suggested that there is still some amount of caution prevailing in the market. Despite the prevailing uncertainty, Indian markets performed better than most of the major global markets.